LexCOMMISSIONER OF CENTRAL EXCISE, HYDERABAD versus M/S. ALDEC CORPORATION
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A B COMMISSIONER OF CENTRAL EXCISE, HYDERABAD v. MIS. ALDEC CORPORATION SEPTEMBER 26, 2005 [B.P. SINGH AND S.H. KAPADIA, JJ.] C Central Excise- Manufacture-Central Excise Act, 1944, Sections 2(j), 3 and 6 and Items 27 (6) and 68-Central Excise Rules, 1944, Rule 174-- Central Excise Tariff Act, 1985-Heading 76.06, Sub Heading 7616.90 Section XV. note 2, Section XVI, note 2 (b)-Production of PAS for venetian blinds by fragmented activities of trader and his job processor-Trader purchasing D aluminium sheets of thickness 2. 03 mm in coil form-One of his job processor slitting and re-rolling them into slats of 0.23 mm thickness-Another job processor painting the same and thereafter the trader selling them as PAS for venetian blinds-Whether they were engaged in manufacture of a separate, independent and identifiable product PAS in lerms of manufac/ure and markelabi/ity classifiable under Sub Heading 7616.90 rendering the trader E liable to pay duty-Earlier in 1986-87, Department considering the case under lhe 1944 Act of only the two job processors hold that the PAS remained covered.under Item 27(6) and no new article stood produced so as to fall under //em 68-Commissioner now considering the activities of the trader and its job processors as a whole hold that the same had resulted F in a new product PAS/or venetian blinds falling under Sub Heading 7616.90 rendering the trader liable to pay excise duty for the period 1990-95-The Tribunal, on appeal reversed thal order. On further appeal, this Court refused to inlerfere in the matter in view of the omission on the part of Commissioner to consider relevant facts and legal provisions-However, held ownership was also relevant to de/ermine the question whether activity constitute G manufacture-The question whether fragmentation of the aclivities by the trader was wilh intention to evade duty not examined. H Words and Phrases-Chargeability and Classification-Held, chargeabi/ity is different from liability to pay duty-Chargeability arises on manufacture-Liability to pay excise duty depends on classification. Respondent firm, M/s Aldec purchased aluminium sheets of thickness 536 COMMR. OF CENTRAL EXCISE, HYDERABAD v. ALDEC CORPN. 53 7 2.03 mm in coil form and fonvarded them to Mis. VPI which in tum fonvarded A the same to Mis SREW for slitting and re-rolling them into slats of thickness 0.23 mm. SREW returned the slats to VPI, which after painting the slats returned them to Aldec. Aldec then sold such PAS as trader in the market . for venetian blinds. Aldec paid excise duty under Heading 76.06 on behalf of SREW and VPI treating them as its job processor. Question whether the fragmented activities of these three resulted in manufacture of a separate, B independent and distinct identifiable product PAS for venetian blinds classifiable under sub-heading 7616.90. In the past (1986-87) Department considered the case of only VPI and SREW and hold that aluminium sheets even though slitted and painted remained covered under Item 27(6) and no new article stood produced so as to fall under Item 68. In 1994, Department C took the view that Aldec was the processor and not a trader as VPI and SREW were only its workmen /labourers wholly owned and controlled hy it Demand notice for payment of excise duty for the period 1990-95 issued by the Department was confirmed by the Commissioner. Tribunnl, on appeal, set aside that order and held that slitting of sheets into strips and painting on them did not amount to manufacture. Tribunal also opined that the Department having accepted the decisions taken in 1986-87 could not claim recovery of duty from Aldec. The Department filed the present appeal. Dismissing the Appeal, the Court D HELD: 1. The basic question is whether Mis Aldec Corporation, Mis E VPI and M/s SREW were engaged in the manufacture of an independent identifiable distinct product, in terms of manufacture and marketability. Chargeability is different from liability to pay duty. Chargeability arises on manufacture under section 3 of the said 1994 Act Liability to pay excise duty depends on classification. Levy is a constitutional concept Therefore, under p the excise law, chargeability, classification, valuation and exemption are different and distinct concepts. Where the goods are specified in the schedule, they are excisable goods but whether such goods can be subjected to duty would depend on whether they were pro
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